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Losing ground: Ontario is the only province in Canada never to have received equalization payments, but that might change.

Article Excerpt
While Alberta's economy is sizzling, Ontario's is in the doldrums--the two events are closely linked. Manufacturing in Ontario is threatened by two things: the high cost of energy to run the plants and the rapid rise in the value of the Canadian dollar caused by the high price of oil and gas. Ontarians are getting a little antsy about this.

Premier Dalton McGuinty has stressed over and over during 2005 that there is a fiscal imbalance in Ontario. If you add up all the money that Ottawa spent in Ontario in 2002 and compared it with what the reds took out of the province, the difference is around $23 billion. This is about $20 billion more than it was in 1995, when the federal government began offloading much of the cost of social programs to the provinces. Prime Minister Paul Martin was federal finance minister back then. He said that Ottawa would cut transfers to the provinces for health, post-secondary education, and welfare from almost $30 billion to $25 billion in 1997-98. This came on top of $1.5 billion in cuts to transfer payments announced in 1994. While that helped reduce the federal government's deficit, it has added to the financial woes of the provinces.

For Ontario, post-secondary funding from the reds dropped from $2.7 billion in 1994-95 to $1.8 billion a decade later. At the same time, Ontarians, who contributed $55.2 billion to Ottawa in 1995-96, were handing over $84.9 billion in taxes by 2004-05 (and receiving just $62 billion back in transfer payments).

With numbers like this, Ontario's Finance Minister Greg Sorbara told Ottawa that the national equalization program had become distorted to Ontario's detriment. And,...

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